I recently reread "Money Angles" a 1984 book by financial writer Andrew Tobias. This book was derived from magazine articles Tobias had written on the general subject of money, investing and personal finance. It is little uneven but overall I liked it. Tobias moves in moneyed circles and the book contains numerous entertaining stories about the financial lives of his friends and acquaintances with which Tobias illustrates his generally sound advice. It is 30 years old so I found it a little dated in places but not too badly. It did help that I am old enough to have lived through a time when for example "... A 9 percent fixed-rate mortgage is a treasure. ..." (p. 79). But while the details of things like tax laws or current prices have changed the big picture hasn't changed that much. There are still many ways to go wrong financially and this book warns about some of them.
This is not a good introductory book to personal finance and investing, it assumes some basic familiarity with the subject and it doesn't attempt to be comprehensive. And I can't really recommend you make a special effort to read it but if you happen to run across a copy you might give it a try.
Friday, October 24, 2014
Wednesday, October 8, 2014
Oddball
Yesterday (Tuesday) the market was down as were all of my stocks except for one. Today the market was up as were all of my stocks except for one. In both cases the oddball was Ensco (ESV) which seems a little strange.
Ensco owns and leases out offshore drilling rigs. I bought some earlier this year because the stock (with a 6% yield and low PE) seemed cheap. This isn't looking like a great pick as the stock has recently gotten quite a bit cheaper. In hindsight I overlooked a couple of things. First while a company like ExxonMobil may not suffer too badly post peak oil production as you would expect decreased volume to be offset by increasing prices it is hard to see a company like Ensco prospering post peak drilling as you would expect fewer leases and lower lease rates (as the surplus of rigs pushes prices down). Second a low PE doesn't mean much if it is based on inflated earnings. The earnings a company like Ensco reports are highly dependent on how fast it is depreciating the expensive drilling rigs it is leasing out. Ensco recently wrote down the value of some of its rigs which means it hadn't been depreciating them fast enough and therefore that its reported earnings have been too high (and hence its real PE was not actually as low as reported).
Ensco owns and leases out offshore drilling rigs. I bought some earlier this year because the stock (with a 6% yield and low PE) seemed cheap. This isn't looking like a great pick as the stock has recently gotten quite a bit cheaper. In hindsight I overlooked a couple of things. First while a company like ExxonMobil may not suffer too badly post peak oil production as you would expect decreased volume to be offset by increasing prices it is hard to see a company like Ensco prospering post peak drilling as you would expect fewer leases and lower lease rates (as the surplus of rigs pushes prices down). Second a low PE doesn't mean much if it is based on inflated earnings. The earnings a company like Ensco reports are highly dependent on how fast it is depreciating the expensive drilling rigs it is leasing out. Ensco recently wrote down the value of some of its rigs which means it hadn't been depreciating them fast enough and therefore that its reported earnings have been too high (and hence its real PE was not actually as low as reported).
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